Ex-minister, others expect oil majors to divest assets

The nation’s oil and gas industry will see a new round of asset divestments by International Oil Companies operating in the country next year and 2019, our correspondent has learnt.

Industry stakeholders including a former oil minister said the recent divestments of assets by oil majors had led to increased indigenous participation and production from local companies.

They, however, expressed divergent views on the Federal Government’s proposed sale of its stakes in some oil and gas assets to raise money as revenue from oil exports remained diminished since 2014 when prices slumped.

The government had in its Economic Recovery and Growth Plan disclosed that it would reduce its stakes in Joint Venture oil assets, refineries and other downstream subsidiaries such as pipelines and depots, among others.

An erstwhile Minister of State for Petroleum Resources, Mr. Odein Ajumogobi, who was the guest speaker at the Petroleum Club Members’ Evening on Thursday, said assets disposal by the IOCs in the country started towards the end of his tenure in 2009 and was caused by a combination of factors.

He said there was pressure from the government on the IOCs to relinquish acreages to indigenous companies who had some capacity.

“Looking forward, it is clear to me that there will be further divestments. Between next year and 2019, all Shell’s onshore assets are coming up for renewal,” he said.

According to Ajumogobia, the renewal of assets in 2009 was one of the drivers that pushed the IOCs to divest some of their assets.

He said, “In other words, the government was saying to them: ‘If you don’t relinquish assets to indigenous players, there will be challenges on renewal.’”

“So, this is going to come around again. I think the first round has proved to be quite successful in terms of increased production and increased indigenous participation. By 2018/2019, we should watch this space because all these assets are coming for renewal, and there will be significant interest,” the ex-minister said.

Ajumogobia noted that a debate had recently emerged as to whether the government should divest some of its interests in some oil assets.

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